Correlation Between Lihtai Construction and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Lihtai Construction and Hung Sheng at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lihtai Construction and Hung Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lihtai Construction Enterprise and Hung Sheng Construction, you can compare the effects of market volatilities on Lihtai Construction and Hung Sheng and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lihtai Construction with a short position of Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lihtai Construction and Hung Sheng.
Diversification Opportunities for Lihtai Construction and Hung Sheng
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lihtai and Hung is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lihtai Construction Enterprise and Hung Sheng Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Sheng Construction and Lihtai Construction is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lihtai Construction Enterprise are associated (or correlated) with Hung Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Sheng Construction has no effect on the direction of Lihtai Construction i.e., Lihtai Construction and Hung Sheng go up and down completely randomly.
Pair Corralation between Lihtai Construction and Hung Sheng
Assuming the 90 days trading horizon Lihtai Construction is expected to generate 2.61 times less return on investment than Hung Sheng. But when comparing it to its historical volatility, Lihtai Construction Enterprise is 3.51 times less risky than Hung Sheng. It trades about 0.12 of its potential returns per unit of risk. Hung Sheng Construction is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,615 in Hung Sheng Construction on September 1, 2024 and sell it today you would earn a total of 80.00 from holding Hung Sheng Construction or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lihtai Construction Enterprise vs. Hung Sheng Construction
Performance |
| Timeline |
| Lihtai Construction |
| Hung Sheng Construction |
Lihtai Construction and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lihtai Construction and Hung Sheng
The main advantage of trading using opposite Lihtai Construction and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lihtai Construction position performs unexpectedly, Hung Sheng can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hung Sheng will offset losses from the drop in Hung Sheng's long position.| Lihtai Construction vs. Taiwan Cement Corp | Lihtai Construction vs. Asia Cement Corp | Lihtai Construction vs. Goldsun Building Materials | Lihtai Construction vs. Universal Cement Corp |
| Hung Sheng vs. Ruentex Development Co | Hung Sheng vs. CTCI Corp | Hung Sheng vs. Information Technology Total | Hung Sheng vs. Ennoconn Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.
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